09 April 2016 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price didn’t do much of anything on Friday. The low tick came about 11:20 a.m. BST in London—and from there it chopped upwards to its high tick, which came just after the COMEX close in New York—and the high tick was only a dollar or so above where it closed in New York on Thursday afternoon. From there, gold was sold down for a small loss on the day.

The low and high ticks are barely worth looking up, but the CME Group reported them as $1,231.00 and $1,244.60 in the June contract.

Gold finished the Friday session at $1,233.40 spot, down $1.90 from Thursday’s close. Net volume was 121,500 contracts, which wasn’t overly heavy. But then again it wasn’t exactly light, either.

Silver didn’t do much in early trading in the Far East on their Friday morning. But starting at noon HKT, it got sold down to its low of the day, which came a few minutes after London opened. From there the price didn’t do much of anything until about twenty minutes after the COMEX open—and at that point it chopped quietly higher into the COMEX close, before trading sideways for the rest of the New York trading session.

The low and high in this precious metal was reported as $15.12 and $15.39 in the May contract.

Silver closed in New York on Friday at $15.36 spot, up 13 cents from Thursday. Net volume was pretty light at just under 28,500 contracts, but there was decent roll-over activity out of May.

Platinum traded a few dollars higher in Far East trading, but was sold down to its $953 spot low just minutes after the Zurich open. It rallied five bucks in the next hour before revisiting its low tick about twenty-five minutes before the COMEX open—and then away it went to the upside. The price was capped at the $967 mark shortly after the London p.m. gold fix was done for the day—and the price didn’t do much after that. Platinum closed in New York yesterday at $966 spot, up an even ten bucks from Thursday.

Palladium also traded a few dollars above unchanged in Far East and early Zurich trading. A willing seller appeared shortly after 11 a.m. Europe time—and the low tick was set at 9 a.m. in New York. It rallied from there but, like platinum, that rally was brought to an end shortly after the London p.m. gold fix as well. By noon EDT it was back to just below unchanged, but rallied to finish in the black. Palladium closed in New York yesterday afternoon at $540 spot, up 4 dollars.

The dollar index closed in New York late on Thursday afternoon at 94.51—and then chopped slowly and quietly higher, with the day’s 94.68 high tick coming around 3:30 p.m. HKT—and thirty minutes before the London open. It was back below unchanged by the London open—and a weak rally gave up the ghost for good about twenty minutes after the COMEX open in New York. The 94.09 low tick came around 11:25 a.m. EDT—and the dollar index struggled higher from there. It finished the Friday session at 94.22—down 29 basis points from Thursday’s close.

And here’s the 6-month U.S. dollar chart—and the six day string of 94.50 closes was broken with yesterday’s close. It will be interesting to see how it fares when trading resumes on Sunday afternoon in New York—and even more importantly, when trading begins in the Far East on their Monday morning.

The gold stocks continue to amaze me. They opened up a hair—and rallied to their highs of the day around 1:45 p.m. in New York trading, with hardly a backward glance. Once the high was in, they did fade a bit in the next twenty minutes of trading, before chopping sideways for the rest of the day. The HUI closed higher by 4.15 percent.

The same can be said for the silver equities, but at least they had a good reason, as the underlying metal actually closed up on the day, which can’t be said of gold. The silver shares followed an identical path to their golden brethren—but Nick Laird’s Intraday Silver Sentiment Index only closed higher by 2.99 percent. That’s because a couple of constituent components—both CDE and SLW—didn’t do particularly well.

For the week the HUI closed higher by 7.87 percent—and Nick’s ISSI was up by 4.77 percent. Year-to-date the HUI and the ISSI are up 74.6 and 61.4 percent respectively.

The CME Daily Delivery Report showed that 30 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. In gold, the largest short/issuer was International F.C. Stone once again with 29 contracts. JPMorgan stopped 9 contracts for its clients—and 8 contracts for itself. Canada’s Scotiabank stopped 7 contracts. The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in April actually increased by 49 contracts—and the total o.i. is now up to 3,581 contracts. Since 18 gold contracts were posted for delivery in Thursday’s Daily Delivery Report, that means that 49+18=67 contracts were actually added to open interest on Friday. April silver open interest fell by 2 contracts, leaving 64 still left.

There was a withdrawal from GLD yesterday, as an authorized participant took out 57,341 troy ounces. And, once again, there was a very decent deposit in SLV, as an a.p. added 1,427,259 troy ounces. This was probably added to cover an existing short position—and I expect that Ted will have lots to say about that in his weekly review to his paying subscribers later today.

In the last two weeks there has been 6.38 million troy ounces of silver added to SLV. Unfortunately, most of it was added after the end of March, so the short report due out on Monday from the folks over at shortsqueeze.com won’t show all of that.

There was a sales report from the U.S. Mint yesterday. They sold 8,500 troy ounces of gold eagles—4,000 one-ounce 24K gold buffaloes—and zero silver eagles.

Month-to-date the mint has sold 13,000 troy ounces of gold eagles—6,000 one-ounce 24K gold buffaloes—and only 1,121,500 silver eagles, which is well below their maximum production capacity. It’s a given that Ted will have more to say about that later today as well.

There wasn’t much activity in gold over at the COMEX-approved depositories on Friday. They didn’t report receiving any—and 20,897.500 troy ounces/650 kilobars were shipped out the door. The link to that activity is here.

It was very quiet in silver as well, as only 10,227 troy ounces were received—and 71,984 were shipped out. The link to that is here.

It was certainly busier over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday. They reported receiving 2,386 of them—and shipped out 622. All of the activity was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, April 5 showed a smallish and almost inconsequential improvement in gold, but a very decent improvement in silver.

In silver, the Commercial net short position in the legacy COT Report declined by a healthy 8,439 contracts, or 42.2 million ounces of paper silver. They achieved this by adding 3,616 long contract, plus they covered 4,823 short contracts. The total of these two numbers is the weekly change.

Ted said that the Big 4 traders reduced their short position by a very decent 3,500 contracts—but the ‘5 through 8’ traders actually increased their net short position by about 2,400 contracts. Ted’s raptors, the Commercial traders other than the Big 8, made up for the rest of it by purchasing around 6,000 long contracts. With the new Bank Participation Report now in hand, Ted pegs JPMorgan’s short position at 18,000 contracts, give or take. Based on that information, it’s a given that Canada’s Scotiabank is now the biggest silver short in the COMEX futures market. The Commercial net short position now sits at 298 million troy ounces of paper silver. It’s much better than it was two weeks ago, but still obscene and grotesque any way you care to look at it.

Under the hood in the Disaggregated COT Report there was a bit of a surprise. There was very little change in the positions of the Manged Money traders as they added 712 long contracts, plus they increased their short position by 1,869 contracts, for a net change of only 1,157 contracts on the short side. The big changes were in the ‘Other Reportable’ and ‘Nonreportable’ categories—particularly the latter, as their net short position increase by a bit over 5,900 contracts. My remark to Ted was that a decent chunk of the Manged Money traders [for some reason] didn’t report their traders for the reporting week, so the CFTC does what they always do when the have to make the numbers balance—and that’s by making the changes in the ‘Nonreportable’/small trader category—and then they make sure that things are back to normal by the next report. The change in the Commercial net short position in the legacy COT Report must match the changes in the Disaggregated COT report—no ifs, ands, or buts about it—because they’re the same numbers in both reports, except they’re broken up into different categories of traders in each one.

In gold, the Commercial net short position only improved by a tiny 719 contracts, which is barely a rounding error. They got to this number by reducing their long position by 5,124 contracts, but they also covered 5,843 short contracts—and the difference between those two numbers is the change in the Commercial net short position. The commercial net short position in gold now sits at 20.7 million troy ounces, virtually unchanged from a week ago.

Ted said that the Big 4 traders decreased their short position by about 800 contracts but, like in silver, the ‘5 through 8’ large traders actually increased their short position by around 3,100 contracts. The raptors took care of the balance, as they decreased their short position by about 3,000 contracts.

Under the hood in the Disaggregated COT Report there wasn’t much in the way of changes, as 719 contracts can only be sliced and diced a few ways when you’re dealing with the three different categories of trader in this report. Those are the Managed Money, the ‘Other Reportables’—and the ‘Non Reportable’/small trader categories. By the way, the ‘Nonreportable’ positions are identical in both the legacy and disaggregated reports. Anyway, the Managed Money traders increased their net short position by 1,447 contracts during the reporting week. They did this by adding 2,581 long contracts, but they also increased their short position by 4,028 contracts—and the net of those two numbers is the weekly change. For the most part, the traders in the other two categories cancelled each other out.

Despite the improvement in silver during the reporting week, the Commercial net short position is still ugly in the extreme—and only exceeded by how ugly things are in gold. The other thing worth mentioning was the fact that the ‘5 through 8’ large traders increased their short positions during the reporting week in both silver and gold, made Ted mention the “double-cross” word again, so I’ll be more than interested in what he has to say in his weekly commentary this afternoon, as he’s the real authority on all this.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data. It shows the days of world production that it would take to cover the short positions of the Big 4 and Big 8 traders in each physically traded commodity on the COMEX.

As I say in every Saturday column—the short positions of the Big 4 and 8 traders in silver continues to redefine the meaning of the words ‘obscene’ and ‘grotesque.’ This week the Big 4 are short 127 days of world silver production—and the ‘5 through 8’ traders are short 59 days of world silver production—for a total of 186 days, more than 6 months of world silver production, or 427 million troy ounces of paper silver.

And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 85 days of world silver production between the two of them—and that 85 days represents about two thirds of the length of the red bar in silver. The other two traders in the Big 4 category are short, on average, about 21 days of world silver production apiece.

The April Bank Participation Report [BPR] data is extracted directly from the above Commitment of Traders Report Report. It shows the COMEX futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off. For this one day a month we get to see what the world’s banks are up to in the COMEX futures market, especially in the precious metals—and they’re usually up to quite a bit.

In gold, 5 U.S. banks are net short 77,109 COMEX gold contracts in the April BPR. In March’s Bank Participation Report [BPR], that number was 72,867 contracts, so they’ve increased their collective short positions by about 4,300 contracts during the reporting period. This is an immaterial change, but the overall net short position is monstrous. Three of the five banks would include JPMorgan, Citigroup—and HSBC USA. As for who the fourth and fifth bank might be—I haven’t a clue, although Goldman Sachs comes to mind as one of them. And if they are in that group, my guess is that they would be long gold.

Also in gold, 17 non-U.S. banks are now net short 71,112 COMEX gold contracts. In the March BPR they were net short only 52,263 COMEX contracts, so the month-over-month deterioration is pretty big, almost 19,000 contracts. As I’ve stated for years, it’s reasonable to assume that a goodly amount of this short position in gold is owned by Canada’s Scotiabank, but it’s also a good bet that, like in silver, that a decent number of the remaining 16 non-U.S. banks are now net long gold in the COMEX futures market.

As of this Bank Participation Report, the world’s banks are net short 31.3 percent of the entire open interest in gold.

Here’s Nick’s chart of the Bank Participation Report for gold going back to 2000. Charts #4 and #5 are the key ones here. Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX gold positions [both long and short] were outed in October of 2012. The ‘click to enlarge’ still doesn’t work using the Internet Explorer web browser, but Google Chrome and Firefox work OK with a right mouse click on the chart.

In silver, 5 U.S. banks are net short 17,892 COMEX silver contracts—and it was Ted’s back-of-the-envelope calculation from yesterday that JPMorgan holds virtually all of that net short position on its own—and maybe a bit more. That makes it almost a mathematical certainty that the other 4 U.S. banks are net long the COMEX futures market in silver. The short position of these five U.S. banks was 20,794 contracts in the March BPR, so there’s been about a 2,900 decline in the net short positions of the U.S. banks since then.

Also in silver, 15 non-U.S. banks are net short 29,925 COMEX contracts—and that’s a decline of only about 900 contracts that these non-U.S. banks held short in the March BPR. I’m still prepared to bet big money that Canada’s Scotiabank is the proud owner of a goodly chunk of this short position—and almost certainly more than JPMorgan is short at the moment. That means that a decent number of the other 14 non-U.S. banks are net long the COMEX silver market.

As of this Bank Participation Report, the world’s banks are net short 16.6 percent of the entire open interest in silver—and all that amount, plus a lot more, is held solely by Canada’s Scotiabank and JPMorgan.

Here’s the BPR chart for silver. Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold. Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars. It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb it is in chart #5.

In platinum, 4 U.S. banks are net short 7,692 COMEX contracts—but their long position [in total] is a laughable 96 contracts! In the March BPR, these same banks were short 8,904 COMEX platinum contracts, so they’ve decreased their short position by a decent amount—1,212 contracts, or just under 14 percent.

I’d guess that JPMorgan holds the lion’s share of that 7,692 contract net short position.

Also in platinum, 16 non-U.S. banks are net short 8,643 COMEX contracts, a drop of about 650 contracts from the net short position they held in March.

If there is a large player in platinum amongst the non-U.S. banks, I wouldn’t know which one it is. However I’m sure there’s at least one big one in this group. The reason I say that is because before mid-2009 when the U.S. banks showed up, the non-U.S. banks were always net long the platinum market by a bit—see the chart below—and now they’re net short. The remaining 15 non-U.S. banks divided into whatever contracts are left, isn’t a lot, unless they’re all operating in collusion—which I doubt. But from the numbers it’s easy to see that the platinum price management scheme is an American show as well, with one big non-U.S. bank involved. Scotiabank perhaps?

And as of this Bank Participation Report, the world’s banks are net short 29.3 percent of the entire open interest in platinum.

In palladium, 4 U.S. banks were net short 2,337 COMEX contracts in the April BPR, which is virtually unchanged from the 2,298 COMEX contracts they held net short in the March BPR.

Also in palladium, 15 non-U.S. banks are net short 2,330 palladium contracts—which is certainly an increase from the 681 contracts that these same banks were short in the March BPR. But even with that increase, their short positions, divided up more or less equally, are immaterial, just like they are in platinum.

For the third month in a row it should be noted—and it’s obvious in the chart below—that the banks, both U.S. and foreign, appear to be heading for the exits in the palladium market, as their net short positions haven’t been this low since back in mid 2009.

But, having said all that, as o this Bank Participation Report, the world’s banks are net short 20.5 percent of the entire open interest in palladium.

Here’s the BPR chart for palladium. You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013. But as I mentioned in the previous paragraph, their footprint is pretty small now. However, I would still be prepared to bet big money that, like platinum, JPMorgan holds the vast majority of the U.S. banks’ remaining short position in this precious metal as well.

As I say every month at this time, the three U.S. banks—JPMorgan, Citigroup, HSBC USA—along with Canada’s Scotiabank— are the tallest hogs at the price management trough. Until they decide, or are instructed to stand back, the prices of all four precious metals are going nowhere—supply and demand fundamentals be damned!

JPMorgan and Canada’s Scotiabank still remain the two largest silver short holders on Planet Earth in the COMEX futures market. But examining this week’s COT Report, combined with the data from the extracted Bank Participation Report, it’s very safe bet that Canada’s Scotiabank has now surpassed JPMorgan in that regard—and now bears the title of KING SILVER SHORT all by itself.

Here’s a chart that Nick Laird passed around late this week, but I just haven’t had the space for until now. It shows the production in tonnes, plus the percentage of world gold production that each of the ten largest gold miners represents.

I have the usual number of stories—and there are one or two of them I’ve been saving for my Saturday column.

CRITICAL READS

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.1 percent on April 8, down from 0.4 percent on April 5. After this morning’s wholesale trade report from the U.S. Bureau of the Census, the forecast for the contribution of inventory investment to first-quarter real GDP growth fell from –0.4 percentage points to –0.7 percentage points.

This tiny story put in an appearance on the frbatlanta.org Internet site yesterday sometime—and today’s first new item is courtesy of Ken Hurt.

You have to wonder whether there are any carbon units left in the casino. The robo traders and HFTs, of course, have an attention span of 10 milliseconds. So their utter lack of concern about context, fundamentals and history is readily explainable. They never get around to it.

But somebody besides the machines is getting paid the big bucks on Wall Street. Do they really think that dancing on a live volcano, as the estimable Ambrose Evans-Pritchard put it recently, is not semi-suicidal?

Yet for the last 18 months that is exactly what they have been doing. The S&P 500 closed today exactly where it first crossed in November 2014. In the interim, it’s been a roller-coaster of rips, dips, spills and thrills.

The thing is, however, this extended period of sideways churning has not materialized under a constant economic backdrop; it does not reflect a mere steady-state of dare-doing at the gaming tables.

Actually, earnings have been falling sharply and macroeconomic headwinds have been intensifying dramatically. So the level of risk in the financial system has been rocketing higher even as the stock averages have labored around the flat-line.

This longish commentary by David showed appeared on his website on Friday sometime—and it’s definitelyworth reading. I thank Roy Stephens for sharing it with us. Another link to this article is here.

When trying to time the next U.S. recession, most economists – as one would expect – look at economic data. The problem with such “data” as last year’s farcical double seasonal GDP adjustments have shown, is that if the government is intent on putting lipstick on the pig that is U.S. GDP, it will do just that over and over, unleashing non-GAAP GDP if it must, to avoid revealing the truth until it is prepared to do so.

To avoid such purposeful obfuscation SocGen’s Albert Edwards looks at places where it is more difficult to fabricate and goal-seek data. Conveniently, he has discovered precisely that in what calls a “fail-safe recession indicator,” one which has stopped flashing amber and has turned to red. He is referring to whole economy profits data, which in his own words “shows a gut wrenching slump.”

What Edwards is referring to is not that different from what we posted about back in October when we said that on 5 of the past 6 times when corporate profits dropped 60%, the economy entered a recession. This time the drop is far worse, and it’s no longer just energy (the loophole used by many to explain away why in 1985 there was no recession). However, instead of looking at bottom up data, the SocGen strategist instead collapses corporate profits from the top down.

Edwards lays out the reasons why he believes that “a recession now virtually inevitable“, and since this is Albert Edwards after all, he has a jovial follow up: not only will the U.S. economy contract, it “will surely be swept away by a tidal wave of corporate default.”This article showed up on the Zero Hedge website at 5:49 p.m. on Friday afternoon EDT—and I thank Richard Saler for sending it along. Another link to this ZH piece is here.

It’s now been seven years since my initial warning of an inflating “global government finance Bubble” – the “Granddaddy of All of Bubbles.” This Bubble did become systemic on a globalized basis, ensuring the strange dynamic of a somewhat less than conspicuous global Bubble of historic proportions. Over the past eight years, global Credit growth has been unprecedented – driven by an extraordinary expansion of government borrowings. The inflation of central bank Credit has been simply unimaginable. Global asset inflation has been extraordinary – especially in securities markets and real estate.

Indeed, extraordinary international financial flows are fundamental to the global government finance Bubble thesis, flows that I believe are increasingly at risk. Along with Bubble flows from China and out of faltering EM, I believe speculative flows grew to immense proportions. And, importantly, the massive global pool of destabilizing speculative finance has been inflated by the proliferation of leveraged strategies. Chair Yellen may not see “high leverage,” yet on a globalized basis I strongly believe speculative leverage reached new heights over recent years. “Carry trade” speculation – borrowing in low-yielding currencies (yen, swissy, euro, etc.) – has proliferated over recent years, especially after the 2012 “whatever it takes” devaluations orchestrated by the European Central Bank and Bank of Japan.

The Japanese have lost control of the yen, which has hurt prospects for Japan’s equities and overall economy. It has also turned various leveraged strategies on their heads, portending pressure on the global leveraged speculating community more generally. Meanwhile, the half life of Draghi’s latest “shock and awe” has proved alarmingly short. Boosting the ECB’s QE program reversed what had been a significant widening of Credit spreads throughout Europe. It’s worth noting that European periphery spreads (to German bunds) widened meaningfully this week. Portuguese spreads surged 48 bps and Greek spreads widened 41 bps. Italian spreads widened 13 bps and Spanish spreads increased 12 bps.

The U.S. economy has all the characteristics of a Bubble economy – one increasingly vulnerable on myriad fronts.

Doug’s weekly Credit Bubble Bulletin is always a must read for me—and this edition appeared on his website late last night Denver time. Another link to Doug’s weekly CBB is here.

Every four years Americans get to vote for a President. The last President who might have made a positive difference to the country and the world was John F. Kennedy. Just before his assassination, JFK was moving to disengage from Vietnam. He was in a back-channel dialogue with Soviet head Nikita Khrushchev to insure a repeat of the 1962 Cuba Missile Crisis, a near-nuclear war by miscalculation, would never happen (bad for U.S. military-industrial complex and the Rockefellers among others). In short, he was starting to deviate from The Program.

JFK as we all know was assassinated on November 22, 1963 at Dealey Plaza in Dallas, Texas. His assassins included networks of Allen Dulles’ CIA, including a then-young CIA agent named G.H.W. Bush; elements of the Mafia around New Orleans mafia boss Carlos Marcello; elements of the Dallas Police; mafia-CIA-linked gangster night club owner, Jack Ruby; Texan political boss, Vice President Lyndon B. Johnson; networks of the Pentagon. The only one who was innocent was the one Ruby rubbed out to silence him: Lee Harvey Oswald.

That was fifty three years ago. I was in Dallas the day Kennedy was shot. The TV scenes are burned in my memory as national trauma like with most Americans back then.

Since then the United States of America, the land of the free and home of the brave, has gradually become a nation of confused, angry, lost souls who no longer know why we should exist as a nation. We’ve lost sight of what happened to our moral purpose so beautifully described in the documents of our founding fathers at the end of the 18th Century. All we do with our rage, frustration and growing feeling of impotence as a people is to project that rage on the world in the form of making wars, wars, wars everywhere–Vietnam, Afghanistan, Iraq, Libya, Syria, wars on our border to Mexico, wars in our cities, and on and on. We don’t even bother to know for what moral purpose the war anymore. We long ago dispensed with the moral open protests that were so prevalent during the 1960’s and 1970’s during the Vietnam War.

This ‘no holds barred’ commentary about U.S. presidents in general—and Donald Trump in particular—appeared on the journal-neo.org Internet site way back on March 20—and I thank Brad Robertson for sending it our way. For obvious reasons it had to wait for my Saturday column. Another link to this longish, but very interesting article is here.

In June 2013, two Swiss lawyers held a private telephone chat. They were annoyed. In London, David Cameron had just given a speech. The prime minister had promised to sweep away decades of offshore “tax secrecy” by introducing a central register. Anybody who owned an offshore company would have to declare it to the authorities.

The G8 summit, to be hosted by Cameron on the shores of Lough Erne, in Northern Ireland, was looming. Top of the agenda: how to stop aggressive tax avoidance.

For much of the 20th century hiding your money was simple. You got a lawyer, filled in a form and set up a Swiss bank account or offshore “shell company”.

Nobody asked questions. For a couple of thousand dollars a year, it was possible to hide away profits where governments could never find them.

But in the U.K. crown dependencies and overseas territories where financial services were the main source of jobs and income times were changing. In tropical tax havens such as the British Virgin Islands a chill wind – or at least the threat of one – was blowing.

This very long essay was posted on The Guardian‘s website at 1:15 p.m. BST on their Friday afternoon, which was 8:15 a.m. in New York—EDT plus 5 hours. It’s definitely worth reading—and it’s the second offering of the day from Roy Stephens. Another link to this commentary is here.

An energy group in Canada said it estimated the two-year spending trends in the oil and gas sector were at their lowest level in more than 60 years.

The Canadian Association of Petroleum Producers estimated capital spending in the sector is expected to decline 62 percent from 2014 levels to $24 billion, the largest two-year decline since record-keeping began in 1947.

The organization last year said it estimated more than 4,000 people would lose their jobs as a result of the downturn in the energy sector. A 2015 budget unveiled by the provincial government of Alberta, which sits at the heart of the Canadian oil sector, anticipated a $7 billion revenue shortfall.

This UPI story, filed from Calgary, showed up on their Internet site yesterday at 8:00 a.m. EDT—and it’s the third contribution of the day from Roy Stephens. Another link to this news item is here.

Senior bosses at the biggest banks in the world were well aware that Libor numbers were wrong and being rigged, a court has heard.

Five former Barclays bankers are on trial accused of conspiracy to defraud, and prosecutors claim they acted dishonestly to manipulate key interest rate benchmark Libor with the aim of benefiting traders’ financial positions.

But lawyers for the former bankers disclosed evidence yesterday [Fri]]] which they say proves the practice was widely accepted in the market. Because the bankers had never been told otherwise, the jury at Southwark Crown Court heard, they cannot be said to have acted dishonestly.

Libor submitter Jonathan Mathew, 35, and swaps traders Stylianos Contogoulas, 44, Jay Merchant, 45, Alex Pabon, 37, and Ryan Reich, 34, are accused of conspiracy to defraud from June 2005 to September 2007. All five have pleaded not guilty.

“Some companies will quote rates to suit their current positions. It has always been the way, BBA Libor is well understood,” said an e-mail from Ian Fox, head of funding and liquidity at HBOS. Another email shown to the court from Dave Lally, managing director at JP Morgan, said: “GBP and USB Libor are higher than their true position, but everyone in the market knows this and prices accordingly.”

This news item appeared on the telegraph.co.uk Internet site at 5:47 p.m. BST on their Friday afternoon, which was 12:47 p.m. in Washington—EDT plus 5 hours. I found this story all by myself—and another link to it is here.

The European Central Bank still has the instruments to counter deflation risks even if it’s not ready to embrace more extreme policies such as helicopter money, Governing Council member Jan Smets said.

“Helicopter money is not on the table, and I haven’t seen any thorough analysis on it,” Smets, who is the head of the National Bank of Belgium, said in a Bloomberg interview in Frankfurt on Thursday. “If in the future, due to shocks or other developments, financial conditions would warrant it, we have a series of instruments that can be used, which include both interest and unconventional policies.”

While Smets joins a chorus of ECB officials underscoring their readiness to ease policy if needed, the comments also indicate central bankers are hopeful the comprehensive easing package announced after their March meeting will help combat too-low inflation.

Smets said it will take time for March’s measures — which included an expansion of quantitative easing to corporate bonds, a bigger monthly spend, rate cuts and long-term loans to banks — to show their real effectiveness.

This Bloomberg news item was posted on their Internet site at 8:42 a.m. Denver time on Thursday morning—and it’s something I found in yesterday’s edition of the King Report. Another link to this article is here.

Business and political leaders in Germany are increasingly frustrated with the monetary policies of European Central Bank head Mario Draghi. Recently, the confrontation has threatened to become damaging to the euro zone.

There was a time when the German chancellor and the head of the European Central Bank had nice things to say about each other. Mario Draghi spoke of a “good working relationship,” while Angela Merkel noted “broad agreement.” Draghi, said Merkel, is extremely supportive “when it comes to European competitiveness.”

These days, though, meetings between the two most powerful politicians in the euro zone are often no different than their face-to-face at the most recent summit in Brussels. She observed that his forced policy of cheap money is endangering the business model of Germany’s Sparkassen savings banks and retirement insurance companies. He snarled back that the sectors would simply have to adapt, just as the American financial sector has.

The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans “may not believe in God, but they believe in the Bundesbank,” as Germany’s central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of “parallel universes.”

This article put in an appearance on the German website spiegel.de at 7:04 p.m. Europe time on their Friday evening, which was 1:04 p.m. in New York—EDT plus 6 hours. It’s the final offering of the day from Roy Stephens—and I thank him on your behalf. Another link to this news item is here.

Scepticism reigns with the main story this week about the “Panama Papers”. But also getting some mention from the pundits, a political crisis in Ukraine, new fighting in Syria and the flare up of hostilities in the Caucasus between the NKR and Azerbaijan. First, the revelations of the “Panama Papers”: Cohen tends to dismiss this as a psy-op attack by the war party in Washington and Brussels against détente efforts by Kerry and Putin over the Syrian civil war. There is now some cooperation between Russia and Washington – as stated in the last broadcast – and there is hope that this could spread to resolving the Ukrainian issue as well, but a plethora of propaganda attacks seen this week represent the factions war within Washington, and even includes a murder in a Washington hotel room blamed on Putin, all attempts by the war party to slow the thaw process down.

The discussion next moves to another focus of the “Panama Papers”, Ukraine’s President Poroshenko, and how this affects the Washington/Kiev relationship. Cohen thinks the revelations against Porshenko (off-shoring of income, ownership of his companies and tax evasion) were also a surprise to the White House and represent real damage for US financial support of the government through the IMF. But the scandal is also hugely damaging to Poroshenko’s political credibility within his country. Can he survive it? What damage has been done to the Ukraine aspirations to join the E.U., and NATO? Again there is much damage done, damage that Cohen considers as the worst of his presidency. For this writer the other curious aspect of the “Panama” revelations should have raised the question that if this is a psy-op out of Washington from in-fighting factions, how does it further the goals of either the war party or the moderates? And we should keep in the back of our minds that should NATO move to put missiles into Ukraine, Putin will almost certainly react militarily. Would Washington authorize this if Ukraine was not a member of NATO? In the current reality where “there are no rules” the likelihood would be high. We should note that even as Ukraine sinks to a failed state status, Washington is still very much focused on controlling that government.

The pundits finish up with a discussion about the viability of NATO as an institution, and I consider this the most important part of the broadcast. Even as Cohen states he is not an admirer of Trump, he makes it clear that it is Trump that is raising the important topics for discussion in the presidential race about American Foreign policy. He raises five essential questions about it: 1) Why must the United States accept a leadership/policeman role for the globe; 2) with the fall of the Soviet Union is NATO’s role obsolete; 3) why does the United States always pursue regime changes when the results are always disaster; 4) why do we treat Russia and Putin as an enemy when they should be a partner; 5) would he, as president, take nuclear weapons off the table? Those were Trump’s questions. By the end of the broadcast Cohen answers most of them and calls on Americans to examine what NATO has done over the past 25 years, what the IMF has done, what the World Bank has done, and what they think these institutions should be doing to make the world safer. Clearly it is not just NATO that is the problem.

This 40-minute audio interview was posted on the audioboom.com Interview on Wednesday—and it’s a must listen for any serious student of the New Great Game. I thank Ken Hurt for the link but, as always, the big ‘THANK YOU’ goes out to Larry Galearis for the above executive summary, which you should read, regardless of whether or not you listen to the interview.

A stronger yen heightens the pressure on the Bank of Japan. Sharp moves in the currency set back Prime Minister Shinzo Abe’s plan to revitalise Japan’s economy. But intervention – selling yen and buying dollars – would be unpopular abroad. The central bank, already deep in experimental territory, may need to do more.

As of early afternoon in Tokyo on April 8, one dollar bought about 108.60 yen, versus more than 120 at the start of the year. The currency’s resurgence owes something to the weaker dollar, but also reflects Japan’s unlikely but enduring status as a “safe haven”: a place to park money amid rising concerns about U.S. presidential elections and Britain’s potential exit from the European Union, among other things.

A key plank of “Abenomics” has been huge amounts of BOJ bond-buying, which helped to take the yen from 85 to about 120 against the dollar in the two years after Abe took office, and handed record profits to Japan’s export-heavy corporate sector. So the partial reversal is a headache: the threat to earnings has knocked the stock market, in turn denting investor sentiment and confidence in Japan’s reforms. A stronger yen also means less imported inflation and bodes ill for government coffers because it translates into lower taxes on wages and profits.

This opinion piece by Reuters columnist Quentin Webb is a must read in my opinion. It appeared on their website yesterday—and I thank Richard Saler for pointing it out. Another link to this commentary is here.

The Finance Ministry plans to increase the number of ¥10,000 bills in circulation, amid signs that more people are hoarding cash.

It will print 1.23 billion such notes in fiscal 2016, 180 million more than a year earlier. The number of ¥10,000 bills issued annually leveled off at around 1.05 billion in the fiscal years from 2011 to 2015.

Some financial market sources believe it is because more people are keeping their money at home rather than in banks, because interest rates on deposits have fallen to almost zero after the Bank of Japan introduced a negative interest rate in February.

The total amount of cash stashed at home is estimated to have surged by nearly ¥5 trillion to some ¥40 trillion in the past year, Hideo Kumano, chief economist at Dai-ichi Life Research Institute, said.

This news story was posted on the japantimes.com Internet site on Thursday sometime—and it’s another news item that I found in yesterday’s edition of the King Report. Another link to this article is here.

Sprott Physical Silver Trust (the “Trust”) (PSLV)(TSX:PHS.U), a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has priced its follow-on offering of 12,300,000 transferable, redeemable units of the Trust (“Units”) at a price of US$6.09 per Unit (the “Offering”). As part of the Offering, the Trust has granted the underwriters an over-allotment option to purchase up to 1,845,000 additional Units. The gross proceeds from the Offering will be US$74,907,000 (US$86,143,050 if the underwriters exercise in full the over-allotment option).

Without doubt the underwriters will exercise the full over-allotment—and it’s Ted Butler’s opinion that this will net the Silver Trust about 5.5 million troy ounces of physical metal, which will be silver that JPMorgan can’t lay their hands on, unless they took up part of the offering themselves. This Marketwired.com story was picked up by the finance.yahoo.com Internet site about 9:30 a.m. EDT on Friday morning—and I thank Ted for bringing it to our attention.

I had one subscriber ask why the share price dropped on the news—and the reason is simple. Once the offering is done, the premium over spot that PSLV had, disappears—and if you were looking for a good entry point for this equity, yesterday was it. Another link to this news item is here.

The PHOTOS and the FUNNIES

The first photo is of one of the fifteen members of the marmot family, but it has other names here in North America. Woodchuck is one of them—and the all-too-familiar ‘ground hog‘. Even though the distribution map says they inhabit this part of North America, I’ve never seen one—and I’ve looked. The second is of a shoe-billed stork—and they are big birds, but with a face that only a mother could love.

The WRAP

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.” — Theodore Roosevelt

Today’s pop ‘blast from the past’ dates from 1961 and 1963. The 1961 instrumental version called Chariot, was covered by Little Peggy March two years later—and it was wildly successful. I still remember the hysteria surrounding the song back then when I was fifteen years young. It’s been covered since to equally critical acclaim, but here’s the original that started it all. The link is here.

Today’s classical ‘blast from the past’ dates from 1858—and it’s Piano Concerto #1 in D minor by Johannes Brahms. I heard part of the first movement while I was driving around earlier this week—and thought it would be a good choice for today’s column. Maurizio Pollini does the honours—and the unknown orchestra that accompanies him is first rate as well. It was performed to a ‘sold out’ crowd in the opera house of the Sächsische Staatsoper Dresden. This is a top-drawer live recording from both an audio and visual perspective. The link is here.

It was another day full of paradoxes. The gold price didn’t do much—and was closed lower. But volume was up there—and the shares sailed. In silver, net volume was light, but the metal itself finished higher on the day, as did the silver equities. And as I mentioned when discussing the Silver Sentiment Index, even they would have done much better than indicated if CDE and SLW hadn’t dragged that index down.

Then there was that little matter of the missing Managed Money trading volume in silver, as the CFTC had to do an emergency fix by adding the missing volume into the Nonreportable category.

I was also intrigued by the increase in the short positions in both gold and silver of the ‘5 through 8’ large traders in this weeks COT Report—and wondering why that happened—and how that might fit into Ted Butler’s ‘double-cross’ scenario.

But still hanging heavily over all the above musings is the obscene and grotesque short positions in both gold and silver—particularly gold—because there’s been no resolution of the sky high Commercial net short position in that precious metal at all.

Here are the 6-month charts for the Big 6+1 commodities that ‘da boyz’ have got under their collective thumbs at the moment. And as I’ve said on many occasions, how these commodities/precious metals perform, sets the trend for the entire commodities complex.

If you’re wondering how this is all going to shake out, you’re not the only person that’s thinking about that, as I am as well. But I’m just an analyst, not a prophet.

However, it’s for reasons like the above that I’ve been ‘all in’ for the better part of fifteen years, because when it does go, there will be virtually no warning, and if it’s handled properly and secretly—and that’s a pretty big ‘if‘—then no entry point will be possible. At that juncture you will either be all the way in, or all the way out—and over 99.9 percent of the world population falls into the latter of those two categories.

As I said in my Thursday column, that having read Jim Rickards latest book, The New Case For Gold, his theories of a gold price reset certainly falls within the realm of possibility—and at the risk of sounding like a broken record, here’s what I had to say about it a couple of days ago….

As you know, it’s been my opinion over the years—along with others—that a rise in the gold price would signal inflation and drag us out of the deflationary spiral that the world’s central banks now face. Jim is of the same mind—and this is what he had to say about it in on pages 86 and 87 of his latest tome:

In a period of extreme deflation today, the [U.S.] government could unilaterally take the price of gold to $3,000 or $4,000 an ounce, or even higher—not to reward gold investors, although it would—but to cause generalized one-time hyperinflation. In a world of $4,000 gold, all of sudden oil is $400 a barrel, silver is $100 an ounce—and gas is $7 a gallon at the pump. Price increases of such a size would change inflationary expectations and break the back of deflation.

This is exactly what the United States did in 1933, and what the United Kingdom did in 1931 when both countries devalued their currencies against gold. In 1933, the U.S. government forced the price of gold from $20.67 per ounce to $35.00 per ounce. It wasn’t a case of the market taking gold higher; the market was in the grip of deflation at the time. It was the government taking gold higher in order to cause inflation. The reason the government did that in 1933 was not because it wanted gold to go up; it wanted everything else to go up. It wanted to increase the price of cotton, oil, steel, wheat, and other commodities. By cheapening the dollar against gold, it cause inflation in order to end deflation.

Will that happen again in 2016? Because as I’ve said before on many occasions over the years, the world’s central banks are all out of aces—and the gold card is the only one in the deck that hasn’t been played as of yet.

Although loath to play it, in the end they may have no choice in the matter—and Russia and China know that all too well, and are positioning themselves accordingly.

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